With petrol and diesel prices skyrocketing, the Union finance ministry is mulling to cut excise duties on petrol and diesel to cushion the impact of record high domestic prices, Reuters reported citing three government officials close to the discussions.
The Nirmala Sitharaman-led ministry has started consultations with some states, oil companies and the oil ministry to find the most effective way to lower the tax burden on consumers without federal finances taking a big hit, the sources said. “We are discussing ways in which prices can be kept stable. We will be able to take a view of the issue by mid-March,” said one of the sources.
Reportedly, the government wants oil prices to stabilise before cutting taxes, as it does not want to be forced to change the tax structure again, should crude prices rise further.
The government might also be waiting for a meeting of OPEC and major oil producers, also known as OPEC+, later this week. “There is an expectation that OPEC+ would agree to ease oil output curbs, we hope oil prices will stabilise after their decision,” the source told Reuters.
Fuel prices in India are mounting with crude oil prices doubling over the past 10 months and the Centre refusing to cut taxes and duties account for roughly 60 per cent of the retail price of petrol and diesel in the country.
Even as crude oil prices hit a low during the pandemic lockdown days of last year, it was not passed on to the consumers as the Narendra Modi government twice raised taxes on petrol and diesel to boost sagging tax revenues. However, with crude oil prices rising, the prices are now at a record high after the Centre refused to reverse the tax raise decision.
The Central and state governments have together raised Rs 4.21 lakh crore, despite a significant decline in local fuel demand, from the petroleum sector in the nine months of this fiscal year (April-December 2020).
Meanwhile, prices of petrol and diesel remained stable for the third day. In Delhi, the prices remained at Rs 91.17 per litre and Rs 81.47 per litre for petrol and diesel respectively, according to the Indian Oil Corporation Limited (IOCL). In Mumbai, the price of petrol is Rs 97.57 per litre. The price of diesel stood at Rs 88.60 per litre.
